PROPOSAL FOR A NATIONAL EARTHQUAKE INSURANCE             PROGRAM FOR GREECE                            Aglaia A. Petseti  ...
It is time we face a GREEK Problem!• Greece is seismically the most active region in the whole  Mediterranean and holds th...
Lessons from 1999 Earthquake in Athens• The most recent devastating event : it hits Greek Capital City  and does so much d...
Cresta Zones - Greece1.    THRAKI AND ISLAND OF SAMOTRHRAKI2.    MAKEDHONIA AND ISLAND OF THASOS (EXCL.THESSALONIKI)3.    ...
Greece’s Residential StockIncrease in residential buildings by 26% and increase in numberof houses by 33% (between years ...
Residential Stock Analysis        1.243.201;                              1.532.068;              40,961         22,226   ...
Residential Stock Analysis 600,000 500,000  400,000  300,000  200,000  100,000            0                1 2 3          ...
Modeling Earthquake Risk for GreeceExposure quantification by employing :                   RMS RiskLink version 9.0     ...
Modeling Earthquake Risk for GreeceTable 1 shows Gross Losses (incl. 2% retention) as an average of all4 employed models a...
The SolutionUrgent Need for the formation of a NatCat for Greece subject to: Compulsory Insurance Insurance available fo...
Case ScenarioResults of Table 1 if applicable to insurable portfolio as defined byinsurance limit calculations, give Table...
Case Scenario 50% insurance penetration RoL is set to 2,7% on 7 bil EUR Limit Surface, construction period and seismic ...
No, we definitely can not do much about this…..                       Protothema.gr
But still we have time to do something about this …..                                                        Beyaz Gazete
Thank you for your attention.                                                 Aglaia Petseti                              ...
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Proposal for a national earthquake insurance program for Greece

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Aglaia PETSETI

University of Pireaus

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Proposal for a national earthquake insurance program for Greece

  1. 1. PROPOSAL FOR A NATIONAL EARTHQUAKE INSURANCE PROGRAM FOR GREECE Aglaia A. Petseti Dept. of Statistics & Insurance Science University of Piraeus, GreeceSpecial Swiss Re session on Financial Tools for Disaster Risk Management Wednesday, 29/Aug/2012 Organized by Swiss Re
  2. 2. It is time we face a GREEK Problem!• Greece is seismically the most active region in the whole Mediterranean and holds the sixth place globally• A strong Earthquake occurs approximately every two years• During the last century there have been more than 40 earthquakes causing human casualties• During the last three decades the direct cost due to earthquakes has exceeded 10 bil. EUR• Historically, the most catastrophic earthquakes have taken place to areas where 70% of the population is located• Less than 20% of the country’s building capacity is insured against Earthquakes !
  3. 3. Lessons from 1999 Earthquake in Athens• The most recent devastating event : it hits Greek Capital City and does so much damage with only 5,9 R Magnitude (!)• Total Losses > 3,5 bil EUR; 140 fatalities, 1.600 injured, over 100.000 homeless in Attica, over 100 building collapses (incl. 4 factories), damages to over 70.000 residencies and 8.000 business premises• Insurance Compensations less than 4% of the total losses: 6.800 residential claims files (average loss 50% of replacement value), 670 industrial claims files• AIR Worldwide estimates that the 1999 EQ would cause 1 bil EUR insured losses if it was to happen a decade later• State Compensations were inadequate
  4. 4. Cresta Zones - Greece1. THRAKI AND ISLAND OF SAMOTRHRAKI2. MAKEDHONIA AND ISLAND OF THASOS (EXCL.THESSALONIKI)3. CITY OF THESSALONIKI4. IPIROS AND NORTHERN IONIAN ISLANDS (KERKIRA, PAXOI, ETC.)5. THESSALIA (EXCL. VOLOS)6. CITY OF VOLOS7. STEREA ELLAS (EXCL. ATHINAI AND PIRAEUS)8. EVVOIA9. CITY OF ATHNAI AND PIRAEUS10. SOUTHERN IONIAN ISLANDS (LEFKAS,KEFALINIA,ITHAKI,ZAKINTHOS)11. PELOPONNISOS (EXCL.PATRAI)12. CITY OF PATRAI13. NORTHERN SPORADES, LIMNOS, SKYROS, LESVOS, CHIOS, KYKLADES14. KRITI (EXCL. IRAKLION)15. CITY OF IRAKLION16. DODECANESE, RODHOS, KARPATHOS, KOS Seismic Zones - Greece Greece is divided into three Zones of Seismic Exposure according to State Antiseismic Regulation. Zone I (blue) represents low exposure, Zone II (green) represents medium exposure and Zone III (red) represents the highest exposure.
  5. 5. Greece’s Residential StockIncrease in residential buildings by 26% and increase in numberof houses by 33% (between years 2000 – 2010) Total Number of buildings for residential use ≈ 4 mil and totalNumber of Houses ≈ 7,5 mil Over 1.500.000 houses are built before 1960 Average surface per house : 85 sq.m2 Over 50% of the buildings are ground floor constructions Construction materials : concrete and masonry for 80% of thetotal number of buildings Total value of residential stock in Greece (buildings andcontents) is ≈ Euro 900 bil EUR {calculations at 1.100 / sq.m2 forbuilding and € 400 / sq.m2 for contents}
  6. 6. Residential Stock Analysis 1.243.201; 1.532.068; 40,961 22,226 15,181 17% 21% 16,981 1,222,5571,043,017, 1 771,406 446,676 4% 490,840 3.476.148; 719,701 2,231,365 48% 581,160 735,380 Before 1960 1960-1985 Zone I Before 1960 1960-1985 1986-1995 1995+ 1986-1995 1995+ Zone II Figure 1. No of Houses by construction period Figure 2. No of Houses by Seismic Zone Zone III 217,377 122,470 287,730 211,063 181,720 102,244 908,067 95,763 734,737 672,712 318,244 415,034 2,588,721 1 2 3 4 410,779 67,709 5 6 7 8 9 10 11 12 169,863 13 14 15 16 Figure 3. No of Houses by Cresta Zone
  7. 7. Residential Stock Analysis 600,000 500,000 400,000 300,000 200,000 100,000 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Cresta Zones 16 Before 1960 1960 - 1985 1986 - 1995 After 1995 Unknown Figure 4. Buildings distribution by construction period per Cresta Zone
  8. 8. Modeling Earthquake Risk for GreeceExposure quantification by employing :  RMS RiskLink version 9.0  AIR Clasic2 version 12.0.0  EQE Enterprise version 3.13 and  IF Elements version 4.8.0.6.Residential Stock was distributed to the 16 Cresta Zones byconstruction period, number of stories, construction type andvalue of buildings and contents for modeling purposes.Resolutions of above catastrophe models varied due to differentparameters and approach.
  9. 9. Modeling Earthquake Risk for GreeceTable 1 shows Gross Losses (incl. 2% retention) as an average of all4 employed models and PML framed by return periods andexpressed as a % of the total value of the residential stock. Table 1. Gross Losses and PML
  10. 10. The SolutionUrgent Need for the formation of a NatCat for Greece subject to: Compulsory Insurance Insurance available for all houses Affordable, risk based and competitive pricing Premium Collection / Retention Rate Control (e.g. utility bills) Insurance Limit benchmark First Loss Cover with no underinsurance penalties Substitution of State’s liability to Earthquake losses only Local insurers: provision of excess limits covers, claims handling, contribution in layers structuring
  11. 11. Case ScenarioResults of Table 1 if applicable to insurable portfolio as defined byinsurance limit calculations, give Table 2 for 100% and 50%penetration scenarios respectively. Exceedance Gross Losses Gross Losses Probability 100% insurable portfolio 50% insurable portfolio penetration penetration Return Period 1 in 5 Year 20% 569.684.407 284.842.203 1 in 10 Year 10% 1.709.053.220 854.526.610 1 in 25 Year 4% 3.418.106.439 1.709.053.220 1 in 50 Year 2% 5.696.844.065 2.848.422.033 1 in 100 Year 1% 9.114.950.504 4.557.475.252 1 in 150 Year 0,67% 11.393.688.130 5.696.844.065 1 in 200 Year 0,50% 13.672.425.756 6.836.212.878 1 in 250 Year 0,40% 15.381.478.976 7.690.739.488 1 in 500 Year 0,20% 21.078.323.041 10.539.161.520 1 in 1,000 Year 0,10% 27.344.851.512 13.672.425.756 Table 2. Gross Losses and PML for the insurable residential portfolio
  12. 12. Case Scenario 50% insurance penetration RoL is set to 2,7% on 7 bil EUR Limit Surface, construction period and seismic zone for houses areconsidered as loading / discount parameters 160 140 140,25 120 112 108,075 100 104 96 89 87 80 80 83 82,5 72 74 71 71 67 69 66 60 61 61 64 50 56 54 57 53 55 55 52 49 43 46 47 65,5 40 39 41 42 42 32 35 36 27 85 20 0 Ζone III; 1986- Ζone I; 1960 - Ζone I; 1986- Ζone II; 1960 - Ζone III; After Ζone II; 1986- Ζone III; 1960 - Before 1960 Ζone I; Before Ζone II; Before Ζone I; After Ζone II; After Private Market Ζone III; 1995 1995 1995 1995 1985 1995 1960 1985 1995 1960 1985 Figure 5. Indicative Program Pricing and Market Comparison
  13. 13. No, we definitely can not do much about this….. Protothema.gr
  14. 14. But still we have time to do something about this ….. Beyaz Gazete
  15. 15. Thank you for your attention. Aglaia Petseti Email: aglaia.petseti@gmail.com Phone No.: +30 6944 22 50 11Special Swiss Re session on Financial Tools for Disaster Risk Management Wednesday, 29/Aug/2012 Organized by Swiss Re

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